The latest figures released today by the UN Food and Agriculture Organisation reveal food prices remained almost unchanged, at near record levels, between July and August. image expired

The Index, which measures the average price of a range of staples including cereals, oilseeds, dairy, meat and sugar, averaged 231 points last month compared to 232 points in July. This is 26 percent higher than August 2010, but seven points below the all-time high of 238 points from February this year.

Within the index, cereals prices rose, reflecting the fact that although cereal production is expected to increase, it will not do so by enough to offset the additional demand; stocks will remain low and prices high and volatile. Although World cereal production in 2011 is now forecast to reach 2,307 million tonnes, 3 percent higher than in 2010, there will be an estimated 6 million tonnes less than predicted in July so supplies remain tight.

High cereal prices were largely offset by declines in international prices of most other commodities included in the Food Price Index; oils and dairy products in particular fell, reducing the impact of rising cereal prices. 

According to the FAO, after drought in the USA affected the maize crop and a dry spring in Europe has affected wheat yields, only the rice crop is stronger than anticipated this year. With production reaching a record 479 million tonnes, rice is the only staple whose stocks are expected to increase in 2011.

Nonetheless, world wheat production is forecast to increase by 4.3 percent (or 28 million tonnes), only 4 million tonnes below the 2009 record. However, wheat inventories are likely to decline to their lowest level since 2009 and world stocks of coarse grains are also forecast to plunge, with maize inventories falling to 124 million tonnes. Given the tight global supply and demand balance for coarse grains, the FAO said its stocks-to-use ratio is forecast to fall to a historical low of 13.4 percent.